Environmental problems usually derive from a poor definition of property rights.
Normally, when environmental policy is justified, concepts such as “externalities” are invoked. Or else people appeal to a very generic concept such as “the environment,” without defining very clearly what “the environment” actually consists of.
Because, frankly, I do not know what this thing called “the environment” is supposed to mean in the abstract. What would a “correct” environment be? A pure environment? Would it mean eliminating all cities, all houses, and returning everything to the way it was in the past?
The moment human beings intervene in nature, they alter the environment. So the question is: what is the correct, healthy, or proper condition that the environment must have in order to be considered “good”?
If the criterion is that it must not affect human health, then we would have to look at concrete cases. But generally speaking, human health does not seem to be seriously harmed in the way that is often suggested, because life expectancy around the world is increasing at an extraordinary speed, both in quantity of life and in quality of life.
So if the environment causes harm, that harm has to be demonstrated in some specific place and with respect to some concrete issue.
Having said that, I do not defend state intervention. I defend viewing environmental problems in terms of property rights. Later we can talk a little about policy.
First, environmental damage is often caused by state intervention, not by the absence of it. Let me explain.
In traditional legal terms, one had the right to pollute only insofar as one did not affect someone else with a better right. For example, it is not the same if I have a factory that produces smoke or some kind of nuisance, and then someone comes to live next to it, as it is if I bring my factory to a place where someone was already living peacefully.
In law, this relates to the idea of “coming to the nuisance.” It is not the same case if I had the factory first and you came to live there, as if you were there first and I came later with my factory.
In the first case, I arrived first, and if you come afterward, you have to accept the existing pollution. But in the opposite case, if you were already there peacefully, then I have to stop. Or at least I have to compensate you for the pollution, provided that the pollution can be proven.
That is to say: if I have the better right, you cannot pollute against me.
This system created incentives for factories and industries to locate as far away as possible from the population, or to find mechanisms to avoid polluting others. Because the affected party could not only stop the activity in court, but could also force the polluter to negotiate.
We could discuss this in Coasean terms, referring to Ronald H. Coase’s work on externalities, bargaining, transaction costs, and property rights — especially ideas associated with The Firm, the Market, and the Law:
But I am not especially Coasean, because that is more the Chicago-school approach.
The idea is that property rights were defined, and the owner could not increase pollution against others. A new installation had to take care not to bother anyone already established there. That greatly reduced the incentive to pollute.
So what happened?
In the nineteenth century, states expropriated waters, rivers, aquifers, mines, the seas, the subsoil, and so on. From that moment on, those goods came to be regulated by states. And states then established pollution licenses.
Take the cellulose factory in Pontevedra, for example.
Pontevedra was a very beautiful city, with its traditional landscape. During Franco’s time, the Spanish state decided to build a cellulose factory there because, supposedly, according to a utilitarian argument, it was necessary to create employment, industry, progress, and national development.
But cellulose production is an extremely polluting activity. It is very unpleasant and especially foul-smelling.
The people who had the better right — fishermen, hotel owners, beach businesses — were expropriated in the name of the general interest, the common good, progress, and industry.
Their rights were overridden, and a cellulose factory was imposed. That factory literally ruined fishermen and damaged those who had hotels or businesses on the beach. This was done in the name of a supposed general interest.
And now people complain that Pontevedra is polluted. But it was the government that decided it should be polluted. The government decided to expropriate the property rights of those who held them and transfer those rights to an industry.
The same happens with rivers, with seas, and with many other things.
If rivers and seas are dirty, then who manages them? Who is the manager of those rivers and seas? Because whoever manages them is clearly managing them very badly.
If there is pollution, responsibility should fall on the manager of those goods.
Normally, privately owned goods are cleaner and less polluted, because the owner has no interest in destroying his own property. Owners have no interest in having their property filled with plastic bags and rubbish.
The problem is that there is no effective ownership over these types of goods. So we would have to ask who is responsible for their condition and discuss how they are managed.
State ownership causes the damage and then tries to correct it with measures such as banning plastics or changing people’s habits, instead of taking care of its own property.
For example, if the air in the streets is polluted, we might ask: who owns the streets? Who owns the airspace or environment there? The owner of the street could say: “Here you cannot pollute. Certain trucks cannot enter here; certain activities are not allowed here.”
But instead of managing it that way, the state imposes a tax on everyone. In Spain they call it a “green cent” — a green tax on petrol and diesel — supposedly to protect the environment.
But before doing that, one should define what environmental damage is, and what the environment should correctly look like.
The waters managed by the state are full of waste. So perhaps we need to establish some kind of property right. Maybe an owner would be able to manage rivers better. Some rivers are full of rubbish, while the air here at this university is clean, green, and pleasant. So perhaps we should examine how property rights work in each case.
This is where we find the theories of market ecology or free-market environmentalism, especially the work of Terry L. Anderson and Donald R. Leal, such as Free Market Environmentalism:
They argue that markets and property rights can protect environmental quality better than state ownership or centralized regulation.
For example, when someone cuts down a tree, he plants another one. Some economists criticize this by saying: “But you will not live long enough to see the tree fully grown.” Well, perhaps not. I am older and may not see it. But that is not the point.
A piece of land with trees planted on it can be mortgaged. It has a higher sale value immediately. Even if you personally do not live to see the tree grow, the land already has greater value because of those trees. Your children may benefit from it, or you may borrow against it.
So clearly assigned property rights are, in my view, the best way to allocate these things.
Each person values the environment differently. What the state does is impose a general valuation of the environment, the same for everyone, as if we all had to value every environment in the same way.
For instance, rulers tend to like beaches very much, so they protect beaches heavily. But what about mountains? Why is a beach considered more beautiful or more valuable than mountain land? Why privilege some spaces over others?
The same happens with natural parks in Spain.
The traditional inhabitants of those places — peasants, farmers, local people — conserved those spaces until today. If they had not conserved them, those parks would not exist now. Historically, they preserved them through their own care.
And what is the prize the state gives them? It expropriates them.
In many cases, the state does not formally expropriate the property itself. The property remains theirs, but they cannot do anything with it. They cannot build, they cannot cultivate, they cannot use it. The state expropriates the use, even if not the title.
These are policies of that sort.
The best public policy, in my view, is to respect property. Because property also adapts to the different valuations that each person has.
For example, I might not value a beach highly at all. In the past, beach land was considered useless. My grandparents would never have imagined people lying in the sun doing nothing. It would not even have crossed their minds. Beach land had no agricultural value.
Then Coco Chanel made tanning fashionable in the 1920s, and suddenly beaches became valuable.
But value is subjective.
With my land, I would do what I wanted. Each person, with his land or beach, would decide whether to preserve it, build on it, or use it differently. Those who value beaches would buy beaches and conserve them beautifully. Those who value mountains would do the same with mountains.
Who decides which places are beautiful?
The same happens with animals. Ugly animals — rats, cockroaches — do not seem to have rights. Pandas, koalas, and bears do, because they are cute. But the criterion is aesthetic. You can do what you want with some species, while others are protected because they are fashionable or attractive.
In the end, it is the government, or the ruler, who decides.
The same thing happens with other great ethical concepts: social justice, equality, redistribution, minimum guarantees, health, and so on.
Some authors have written about pharmacracy or the therapeutic state. This is most likely a reference to Thomas Szasz, especially Pharmacracy: Medicine and Politics in America:
And also The Therapeutic State:
Szasz criticized the way medical and psychiatric language can be used to justify political control.
The state says: “You cannot smoke, for your health. You cannot engage in this practice, for your health.”
Other interventions are justified in the name of security: national security, food supply security, infrastructure policy, military security.
And now we have the environment.
When I was a professor years ago, there were no ministries of the environment. Now they exist everywhere. And not only do they exist, they have the capacity to decide whether you may use your land, build something, construct a public work, open a factory, or carry out almost any intervention.
Everything now requires an environmental condition or environmental assessment.
For example, the urban plan of Vigo, my city, was halted because it lacked an environmental evaluation. So the environment becomes a very powerful instrument.
And again: I do not know exactly what “the environment” consists of. It is not clearly defined.
They have found a gold mine in climate change. In Spain, for example, they want to raise diesel taxes by ten cents per liter in the name of the environment. They are forcing people to change car engines in the name of the environment. They are subsidizing — with our money — all kinds of rent-seeking: green energy producers, wind energy companies, ecological engine manufacturers, liquefied gas engines, hybrid engines, electric engines, and other technologies.
It is a gold mine. They have found an enormous source of intervention in every sector and of extracting rents from every sector.
Climate change is another matter that can be discussed separately. What must be discussed is not only climate change itself, but also its consequences and where those consequences can actually be observed.
For example, someone might say: “Climate change affects certain groups.” Very well. Then let us define that concretely and debate it seriously.
What is my right to the climate?
If it can be proven that a particular industry or activity caused a specific climate-related harm to a specific person, then we could discuss compensation from the polluter to the affected party.
There one could talk about Coasean compensation or bilateral agreements.
But it is something else to say that there is a general temperature threshold that cannot be exceeded, that this is bad, and that therefore we must impose taxes and regulations on everyone.
In the end, what I see is that, regardless of the problem — and of course the problem must be clearly defined — we have to ask: what exactly is the problem? What are its causes? And what is the cheapest way to correct it?
It may be cheaper to correct the effects of climate change than to try to stop climate change itself. This argument is associated with Bjørn Lomborg, especially in The Skeptical Environmentalist:
And also in Cool It: The Skeptical Environmentalist’s Guide to Global Warming:
https://www.amazon.com/Cool-Skeptical-Environmentalists-Global-Warming/dp/030738652X
Lomborg argues that climate change is real, but that policy should focus on cost-effective responses: adaptation, targeted mitigation, technological innovation, and prioritizing the problems where spending produces the greatest human benefit.
For instance, if there are floods, one can build protective infrastructure. One has to calculate the cost.
There is a book I like very much by Dennis T. Avery, Saving the Planet with Pesticides and Plastic:
It is a very politically incorrect book. It argues, for example, that plastics and pesticides may actually do more for the environment than many environmental policies, because high-yield farming can produce more food on less land.
Why? Because they make agricultural production more concentrated and productive. Greenhouses and plastics allow more food to be produced per square meter. That prevents agriculture from expanding horizontally over much larger areas. In that sense, they save land for nature.
The same applies to the idea of sustainable growth.
In Guatemala, for example, people discuss sustainable growth. But I do not know very well what “sustainable growth” means either.
The only correct sustainable growth, as I understand it, is established through the price system.
This has much to do with the theories of the Club of Rome in the 1970s, especially the famous report by Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III, The Limits to Growth:
That work became associated with warnings about resource depletion, population, industrial growth, and environmental limits.
It also relates to the catastrophic predictions of Paul R. Ehrlich, especially The Population Bomb:
That book warned of mass starvation and overpopulation crises.
Those predictions said that resources were going to run out, that we would suffer famines, that the United States would experience hunger in the 1980s, and so on. None of those predictions came true.
Resources do not exist objectively in the ground. Resources exist in the human mind.
This idea strongly echoes Julian L. Simon, especially The Ultimate Resource 2:
Simon argues that the ultimate resource is human creativity, imagination, and problem-solving capacity.
Our ancestors in caves had all the metals available to them, but they were not resources for them. Oil was not a resource for them. Copper, iron, steel, wood, coal, air, water, tides, wind — all these things become resources only when human intelligence discovers how to use them.
People worry about the consumption of non-renewable goods. But I do not really know what “non-renewable” means in a strict economic sense. William Stanley Jevons, one of the founders of marginalist economics, wrote about this in The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal Mines:
There were once fears that coal would run out. But coal became more abundant because new ways were discovered to mine deeper coal, to use better machinery, and to reuse coal that previously could not be exploited.
So we move away from coal not because it has run out, but because we have better alternatives. And also because coal pollutes and emits CO₂ and so on.
The environment, like childhood protection, health, equality, or justice, has become one of those things that nobody dares to question. But there is no single environment for everyone, and not everyone values it in the same way.
A market system would allow each person to value the environment he likes most.
Green ideology, or green political thought, has a problem with the Austrian concept of value. It cannot accept the idea that value is subjective. It tends to believe that certain things, such as the environment, have natural or intrinsic value independent of human relations.
As an Austrian economist, I would say that nature has the value that human beings give to it. It does not have intrinsic value by itself.
What happens is that the vision of certain groups, who hold nature in very high esteem, is imposed on everyone else. Their criterion becomes compulsory for all.
But this is also historically contingent. In earlier times, in my grandparents’ generation for instance, nature was often seen first as an enemy. It was something to be overcome so that humans could survive and produce.
Once we become developed and wealthy, once we take wealth for granted, then we begin to value nature aesthetically. But that is something that comes with prosperity.
Many exaggerations about nature are based on an idealization of the past.
Public policy has the usual problem of interventionism: it creates unintended consequences in other sectors and areas.
There are, for example, conservation organizations that allow oil exploitation beneath their lands because that allows them to finance the conservation of those lands. They use the income to keep the surface green and preserved.
So reality is much more complex than the usual environmental discourse suggests.
